Institutional EYE

Commentary on Corporate Governance Issues

CEO Pay Sector Analysis: Healthcare

This is the time of the year when boards are called upon to fix pay levels of its members for the coming financial year. This series on CEO pay, compiled by IiAS using data from comPAYre, IiAS’ cloud-based pay-versus-performance tool, is aimed at sensitizing boards on the remuneration trends across the market, as a basis for determining appropriate pay structures. This fifth piece in the series is focused on pay levels in healthcare companies, which includes pharmaceutical companies and healthcare providers. The median CEO pay in the healthcare sector is aligned with that of S&P BSE 500. However, in specific pockets, there are a few worrying trends – more than 1/4th of the CEOs draw a remune

Fortis Healthcare: Finding the best medicine

The legitimacy of Fortis’ board is under question, and therefore, the legitimacy of the process it has adopted to sell the company is equally under question. Investors have called for greater independence at the board level to support an objective decision-making process. Yet, in continuing to rely on known associates, the board is widening the trust deficit with investors. Administering a selling process that limits the full discovery of price, leaves investors worried that they are being short-changed. IiAS believes the board should run a process that allows all potential bidders to bid, albeit within a tight time-line. Investors have questioned the legitimacy of Fortis Healthcare Limite

How should Fortis confront its Revlon moment?

Fortis Healthcare’s investors may be forgiven for wondering why everyone in the room is sitting scared. There are four competing bidders sitting across the table, yet all of them are holding back. Nor is the board pushing them hard. For investors the solution lies in pressurizing the board to be bold and redraw the sale process. The unexpected and unprecedented fourth bid by Fosun International Limited and the revised offer from the Munjal-Burman combine for Fortis Healthcare, is clear proof that there is value in the assets. The board needs to rework how it approaches the various bidders and for it to open up the bidding process. This is not without its risks, but Fortis’ board needs to ens

CEO Pay Sector Analysis: Automobiles

This is the time of the year when boards are called upon to fix pay levels of its members for the coming financial year. This series on CEO pay, compiled by IiAS using data from comPAYre, IiAS’ cloud-based pay-versus-performance tool, is aimed at sensitizing boards on the remuneration trends across the market, as a basis for determining appropriate pay structures. This fourth piece in the series is focused on pay levels in automobile companies. The automobile industry is home to some of the highest paid chief executive officers in India Inc. Four out of every 10 CEOs earned at least Rs.100 mn in the last fiscal while the ratio of the top executive pay to the median employee salary is over 10

Sholay, Satyam and Fortis Healthcare

Gabbar Singh “Kitne aadmi thay?” Kaliya “Sardar, do aadmi thay” Gabbar Singh “Do aadmi? ….. aur tum teen….phir bhi waapas aagaye. Khali haath” The above dialogue from Sholay still reverberate and if twisted, fit well with the current developments at Fortis Healthcare Limited (Fortis). The company has two long-standing directors (- if you exclude the two additional directors appointed recently) on its board. Three entities have put in a bid for the beleaguered entity. Had the brothers still been in direct control, then even ‘sardar’ would not be out of place. The unusual development leaves Fortis’ shareholders asking if the board has sufficient depth to deal with the complexity of the sale an

CEO Pay Sector Analysis: Private Banks

This is the time of the year when boards are called upon to fix pay levels of its members for the coming financial year. This series on CEO pay, compiled by IiAS using data from comPAYre, IiAS’ cloud-based pay-versus-performance tool, is aimed at sensitizing boards on the remuneration trends across the market, as a basis for determining appropriate pay structures. This third piece in the series is focused on pay levels in private sector banks. Private sector banks and their boards have been in the news for the past couple of weeks. In this context, IiAS trains the spotlight on private sector bank CEO remuneration. The sector is characterized by marginal representation by promoters and contra

Boards on a rescue mission

It is no longer business as usual for corporate boards - board members are now increasingly in the line of fire. Recent instances at Infosys, the Tata group and now ICICI Bank and Axis Bank, have created a new imperative for boards – to protect their companies’ reputation. IiAS believes for boards to gain the investors trust, they must be must be clear, proactive and transparent in their communication to stakeholders. Boards are the new custodians of their companies’ brand equity, whether they are prepared for this role or not. In an environment where stakeholders have little patience for corporate excesses, and an unrelenting media that has become the new watchdog, boards need to be better

CEO Pay: Bridging the pay gap

This is the time of the year when boards are called upon to fix pay levels of its members for the coming financial year. This series on CEO pay, compiled by IiAS using data from comPAYre, IiAS’ cloud-based pay-versus-performance tool, is aimed at sensitizing boards on the remuneration trends across the market, as a basis for determining appropriate pay structures. Becoming the CEO is not just good for the ego, it is financially rewarding. As per IiAS data, CEOs in the top 500 (excluding PSUs) were paid more than twice as much as the other executive directors (ED) on the board. And it helps if you are from the promoter family: top promoter directors are paid ~1.6 times as much as professional

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